Company Liquidation

Company Liquidation

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The UAE is a thriving business region with loads of business hubs and free zones that promote business activities. Companies and investors from all over the world flock here to establish companies and chase opportunities. In a place that is so favorable for business, new companies are always being formed. But this doesn’t mean that every company in the UAE becomes successful.

The survival and success of a business depend on a number of factors. Many businesses are unable to keep up with these factors, and as a result, they end up failing. A failing business can quickly turn into a liability for its owner. You can’t simply abandon a business when it stops performing. Just like with forming a company, there is a formal procedure for closing a company. This procedure is known as liquidation, and in the UAE, it’s pretty important.

What is Liquidation

Liquidation means winding up a business. Simply put, company liquidation is a solvency process in which a company’s assets are valued and sold off in order to clear any debts that it may have. The larger a business is, the more complex the liquidation process becomes since more assets and liabilities need to be taken into account. The liquidation process in the UAE can also be tricky because there are loads of authorities with their own rules for liquidation. Knowing the rules and regulations that apply to your company is important.

There are two kinds of liquidation i.e. mandatory and voluntary. Mandatory liquidation (also known as creditor’s liquidation) is carried out when a company is forcibly dissolved in order to pay off its debts. Voluntary liquidation isn’t forced upon a company by a third party. It is a decision taken by the company in order to clear its debts.

Liquidation Process in UAE

Before you initiate the liquidation process, you must first get things into order. You need to have the following documents prepared:

Liquidation Notice Period

The government grants businesses a notice period in which they can cater to any debts. The notice period has a limited duration of 45 days. Before you begin the process, it is best to have all essential tasks (related to your business and your employees) taken care of. Apart from arranging all the required documents, the below tasks must also be completed:

Once these documents are ready, you can start the process of closing the company. The liquidation process for mainland companies and free zone companies varies.


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